EDITORIAL: Flaherty’s record steady but opaque

Then finance minister Jim Flaherty responds to a question from the media following federal-provincial finance ministers’ meetings in Quebec in December. Mr. Flaherty resigned as federal finance minister on Tuesday. (ADRIAN WYLD/CP)

First and foremost, former federal finance minister Jim Flaherty is likely to be remembered as the steady man at the helm of Canada’s economy in the midst of some of the stormiest economic times of the last century.

Mr. Flaherty, 64, shocked political observers on Tuesday by announcing he was stepping down as finance minister. Holding that post since the Tories first came to power in 2006, Mr. Flaherty departs as the third-longest serving finance minister in Canadian history.

Though Prime Minister Stephen Harper’s minority government seemed slow at first to appreciate and react to the breadth and severity of the 2008 global recession, Mr. Flaherty took crucial steps at the time to ensure liquidity wouldn’t dry up in the banking system, so credit could continue being extended to Canadian businesses.

After a controversial proroguing of Parliament, in early 2009 Mr. Flaherty brought down a budget that projected sharply higher annual deficits — unavoidably raising the national debt — so that, mirroring similar efforts around the globe, there would be sufficient stimulus for the country’s faltering economy.

Certainly, Mr. Flaherty and Canada benefited from the more conservative regulatory environment already in place for the financial sector in this country. The steady leadership provided by the Bank of Canada, by both former governor David Dodge and his successor, Mark Carney, also played a crucial role.

But Mr. Flaherty also deftly steered the country through the lingering weakness in the global economy following the 2008 financial crisis, including the anemic recovery of our largest trading partner, the U.S., and the sovereign debt crisis in Europe. He moved to tighten mortgage and borrowing rules to try to rein in public debt levels. And from a monstrous deficit of $50 billion in 2009-2010, the former finance minister’s subsequent budgets steadily cut federal spending to slowly move the country back to balance.

When growth did not materialize due to a glacial global recovery, the former finance minister proved flexible.

But Mr. Flaherty also too often operated by stealth. Like his government, the finance minister tended to be opaque about how he was going to achieve spending cuts, repeatedly frustrating former parliamentary budget officer Kevin Page when he sought details about the Tories’ plans.

Budget implementation bills became omnibus legislation seemingly designed, by magnitude and scope, to overwhelm attempts by the opposition and media to scrutinize what the Tories were doing. Mr. Flaherty’s introduction of equalization caps downloaded cost-cutting to jurisdictions in far worse financial shape than Ottawa. Putting health care and social cash transfers purely on a per capita basis also disadvantaged provinces like Nova Scotia with relatively lower incomes and stagnant, older populations.

New Finance Minister Joe Oliver, with his investment banking background, has the confidence of the markets. He was a natural choice for Mr. Harper, who no doubt wanted a steady hand headed into an election in 2015.